We all know how hard it is to secure bank funding when setting up a new business venture. Even if they agree to lend you money, you’ll end up paying far more back once you’ve paid the interest. If you are wondering how to fund your small business, you need to stop thinking about banks and start getting creative – there are plenty of other ways that you can secure financial backing for your venture! So don’t play into the hands of the banks – think outside the box and consider how else you can fund your enterprise. Here are just some of the many ways that small businesses are getting their hands on that much-needed cash backing:
Your Private Savings
We understand that dipping into your personal savings account isn’t too attractive on the face of it. If you are lucky and organized enough to have a little financial buffer behind you then spending it all on a new business venture can be a little scary as you will have nothing to fall back on. However, if you have the funds available then you should use them, because it will cost you a lot less in the long run. When your business is up and running you can start building up your savings fund again, but in the meantime the more financially independent you can be, the better.
Loans From Family & Friends
You may well find that somebody you know believes in you enough to put their money where their mouth is. Don’t be scared about approaching someone you know well and asking them if they would consider helping you out. They can only say no (but don’t be offended if they do). If you borrow money from friends and family then it’s important to agree the terms of the repayment – get it written down so that everybody knows exactly where they stand. It may seem a little over-formal, but both parties will be glad of the written, signed proof of what has been agreed. If you don’t get this in writing then down the line you may well find that your relationship is put under considerable strain. Make paying the money back your first priority, and don’t forget to thank them.
Get an Investor
Many small businesses find that selling of a share in their business in return for some investment can draw up an investment agreement between you. The percentage once you find a suitable investor, and never give away more than you are willing to. You will have to decide between you whether or not they will be a silent partner, and you’ll need a lawyer to draw up an investment agreement between you.